To streamline business operations and achieve supply chain visibility, more and more trucking companies are turning to a transportation management system (TMS) that will help manage freight from quote-to-cash. While adopting a TMS is undoubtedly beneficial to carriers and brokers, it’s also a valuable tool for their customers and partners — especially when integrated directly with their own software.
Enter EDI (Electronic Data Interchange) and API (Application Programming Interface), two ways trucking companies can directly integrate and collaborate with their customers and partners and support a simplified supply chain that works for all stakeholders. Proven and reliable for carriers, brokers, and their partners and customers, EDI and API are highly capable of streamlining a supply chain that has been forever upended by the likes of Amazon. But which one should you choose?
EDI for trucking
EDI is the long-standing and legacy format for system-to-system communication. While considered by many businesses to be older technology, it’s a tried-and-true way to reduce paper documentation and manual spreadsheet data entry, therefore reducing problematic communication errors. Despite EDI’s age, it is still effectively used today by many large retailers or huge organizations for tasks within transportation such as sending load tenders, status updates, and invoices.
Imagine a big retail customer is ready to send a load tender. Their software will generate an EDI version of the tender that can then be sent to the carrier or broker and developed into a readable, actionable document within your software. At this point, the carrier or broker can decide whether to accept or decline the load, sending back a response.
EDIs work quickly and incredibly well at transmitting information between two parties. Their biggest issue is that they can be time-consuming and complex to set up. Doing so involves coordinating with many people, and entails detailed technical specifications of how those computer-readable documents should appear. And, it can often involve dealing with multiple vendors at the same time.
API for trucking
Reaching beyond just the exchange of documents, APIs can be written to automate any action someone can perform within a software and can be integrated with other systems to share and edit the data it holds. Think of it like this: users typically need to enter in an order and dispatch it to a driver manually. An API can be developed specifically to manage and execute all of these processes automatically. A TMS will typically have a collection of APIs that automate these common tasks unique to trucking, as well as plug-and-play integrations with common applications they rely on. For example, connections can be built with accounting software's so that when bills or invoices are generated, they automatically get exported to Xero or QuickBooks. Another example of an API in action is streamlining crossing international borders and ELD compliance by integrating with tools like BorderConnect.
What’s more, API also allows your partners and customers to write a program that can work directly in their own applications. This could mean, for example, building a connection for a broker to instantly dispatch to a partner carrier’s drivers.
The value of an AP is only limited by the imagination (and capabilities) of its programmers. When one API can talk to another, trucking companies will realize immense value through all the newfound efficiencies.
A great opportunity to explore what API has to offer is when a transportation company’s customers are showing interest in automating common workflows with you. This can be things like order flows, real-time order tracking, or sending/receiving invoices. APIs are flexible and customizable, offering exchangeable, real-time information that work with various software, applications and platforms. This means complete transparency and maximum efficiency. API implementation can be less costly than EDI because it doesn’t require ongoing maintenance or translation services and is an excellent method to differentiate as a partner and service provider.
How do you know whether to use EDI or API?
While many trucking companies are adopting APIs when and where they can, EDI is still widely used in the transportation industry, and that’s not likely to change anytime soon. But just because the tech has been around for quite some time, doesn’t mean it’s too old-fashioned to be efficient or right for the job. EDI has adapted to evolving industry-specific requirements and laws, and if optimized correctly, can offer significant benefits. As many enterprise shipping customers will still prefer sending orders through EDIs, it often becomes part of customer service for trucking companies to use their customer’s preferred communication methods.
Generally, experts recommend using an EDI only when an important customer explicitly requires one. Otherwise, using API is favorable for its flexibility, speed and sustainable upkeep. More and more companies are leaning towards API connections, which also means that resourcing for EDI will minimize over the next 10 years. When looking forward, APIs are the more future-proofed option to go with if you have the choice.
Reaping the benefits of EDI or API within a TMS
The good news is both EDI or API can position a trucking company for supply chain success. Likewise, they can collaborate to provide greater context to all the integrations within a digital ecosystem and facilitate downstream business procedures and data planning. Utilizing the capabilities of either EDI or API within a single TMS will strengthen the exchange of data capabilities.
Regardless of which route a transportation company takes when choosing between EDI, API or using both across different customers, setting them up and executing maintenance and updates can be a challenge. Choosing a TMS partner that is well-versed in both will be essential for both carriers and brokers. Deep domain expertise in either will best ensure integrating with customers or partners is optimized to securely support data exchange that will always be simple, reliable and transparent.